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The Illusion Of Proxy Access Is Classic SEC Misdirection

Stephen Davis and Jon Lukomnik | November 30, 2004

Houdini could teach the SEC a thing or two. Yes, the great magician is dead; but, then again, so is the SEC’s draft proposal on proxy access. Or, at least it soon will be, given its convoluted triggers, heavy lobbying against it by the business roundtable, a threatened lawsuit should the SEC go ahead, and—most importantly—the unwillingness of investors with capital at risk to wait for it.

While alive, however, both Houdini and the proposal were masters of misdirection: the art of making the audience look in one direction while the action happened elsewhere.

Two-Headed Red Herring

Proxy access may be the single most controversial issue pending before the SEC.

The crux of the matter is simple—should shareowners be able to nominate directors directly on the company proxy?

Some shareholder activists point to the board’s role as fiduciaries for shareholders and say, “Of course; the principles of shareholder...

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